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Pay for performance: a dangerous health policy fad that won’t die

Pay for performance: a dangerous health policy fad that won’t die

The latest research shows that this carrot-and-stick approach to improving health care doesn't work.

By Kip Sullivan and Stephen Soumerai
STAT News, Jan. 30, 2018

Pay for performance, the catchall term for policies that purport to pay doctors and hospitals based on quality and cost measures, has been taking a bashing.

Last November, University of Pittsburgh and Harvard researchers published a major study in Annals of Internal Medicine showing that a Medicare pay-for-performance program did not improve quality or reduce cost and, to make matters worse, it actually penalized doctors for caring for the poorest and sickest patients because their “quality scores” suffered. In December, Ankur Gupta and colleagues reported that a Medicare program that rewards and punishes hospitals based on arbitrary limits on the number of hospital admissions of heart failure patients may have increased death rates. On New Year’s Day, the New York Times reported that penalties for “inappropriate care” concocted by Veterans Affairs induced an Oregon hospital to deny acute medical care to its sickest patients, including an 81-year-old “malnourished and dehydrated” vet with skin ulcers and broken ribs.

And just three weeks ago, the Medicare Payment Advisory Commission recommended that Congress repeal a Medicare pay-for-performance program, imposed by Congress in 2015, because the program is costly and ineffective.

This bad news comes on top of a decade of less-publicized research indicting policies intended to reward and penalize doctors based on measures — most of them inaccurate — of their cost and quality. That research demonstrates that penalties against doctors:

Subjecting doctors and hospitals to carrots and sticks hasn’t worked for several reasons. The most fundamental one: Clinician skill is not the only factor that determines the quality of care. Consider one widely used performance measure: the percent of patients diagnosed with high blood pressure whose blood pressure is brought under control. Doctors who treat older, sicker, and poorer patients with high blood pressure will inevitably score worse on this so-called quality measure than doctors who treat healthier and higher-income patients.

This divergence between actual and measured skill will happen — regardless of economic incentives — because of factors outside physicians’ control. These include patients’ health, genes, income, ability and willingness to exercise, access to health insurance, and stressors at home and work. In other words, this “performance” measure is not a measure of quality but a mishmash of many factors, only one of which might be physician skill.

The use of such crude performance measures creates several destructive side effects, most notably harm to patients. This harm is inflicted in two ways. First, doctors who treat a disproportionate share of sicker and poorer patients are the most likely to be hit with penalties and therefore end up with reduced resources with which to treat their patients. Second, the certainty that sicker and poorer patients drag down doctors’ scores causes some doctors to avoid treating these patients, causing serious preventable illness and additional medical costs.

With all the bad news about pay-for-performance programs and their destructive effects, it would be easy to assume that the concept will soon die a well-deserved death. In an editorial accompanying the Annals of Internal Medicine study, Harvard’s Ashish Jha and Boston University’s Austin Frakt, both of whom had previously expressed sympathy for paying bonuses, argued that it was time to abandon pay-for-performance programs. The Annals study “should be the final nail in the coffin of the current generation of P4P [pay-for-performance],” they wrote.

Yet we aren’t celebrating the death of this policy because evidence has never mattered to its proponents. Bonus-and-penalty policies became wildly popular among policymakers and the insurance industry, even though there was no evidence supporting the fad when it took off in the early 2000s. Although research indicting pay for performance has piled up since then, policymakers and academic cheerleaders have either ignored it or argued that pay for performance only needs tweaking.

But their suggested tweaks, such as increasing payments to doctors, don’t work. A nationwide incentive and penalty program in the United Kingdom paid an extra $40,000 per year on average to family doctors and still failed to improve care.

In the early 2000s, pay for performance was endorsed by influential groups and individuals, including the Medicare Payment Advisory Commission and Donald Berwick, who was later to become President Obama’s administrator of the Centers for Medicare and Medicaid Services. These endorsements cited no research. As one review paper put it in 2006, pay-for-performance programs “are being implemented in a near-scientific vacuum.”

Despite the lack of evidence, proponents hyped the costly policy with great confidence. “There’s no question that pay for performance will work,” said Thomas Scully, CMS administrator under President George W. Bush, in 2003. Berwick, who had declared in 1995 that pay-for-performance policies are “toxic,” “naïve,” and “absolutely wrong,” asserted in 2003 that payment for performance should become “a top national priority.” Berwick’s 180-degree reversal illustrates how powerful pay-for-performance folklore had become by the early 2000s, even without a shred of good evidence.

Thanks to the groundless cheerleading by health-policy heavyweights, bonus-and-penalty programs spread like crabgrass through the American health care system. By the late 2000s, objective research on pay for performance began to trickle in. By the early 2010s, there was more than enough evidence to conclude that it does not work and even harms patients. Jha and Frakt concluded that practices that care for lower income or sicker patients received greater penalties, “essentially creating a reverse Robin Hood effect” that may have “exacerbated existing disparities in care.”

The Medicare Payment Advisory Commission and other critics of Medicare’s current pay-for-performance program have adopted a baffling response to this research. They argue that Medicare should terminate its program but that other organizations should continue to use the same crude pay-for-performance schemes that Medicare uses. Jha and Frakt, for example, justify the abandonment of pay for performance on the ground that “alternative payment models,” most notably accountable care organizations, “have exhibited more promising performance than standard P4P programs.”

We disagree. Accountable care organizations have failed just as badly as pay for performance, in large part because they, just like Medicare, dish out rewards and penalties using the same crude “performance” measures.

Performance-based pay may improve the sales of products like dishwashers and computer products. But it is irrelevant to the complexities and professionalism of good doctoring and other human services like education. The research on pay for performance in health care is now conclusive: It’s time to terminate these harmful bonus-and-penalty schemes.

Kip Sullivan, J.D., is a member of the Health Care for All Minnesota Policy Advisory Committee and the legislative strategy committee of the Minnesota Chapter of Physicians for a National Health Program. Stephen Soumerai, Sc.D., is professor of population medicine and founding and former director of the Division of Health Policy and Insurance Research at Harvard Medical School, where he teaches research methods.

https://www.statnews.com…

What will Amazon, Berkshire Hathaway and JPMorgan Chase do for health care?

Amazon, Berkshire Hathaway and JPMorgan Chase & Co. to partner on U.S. employee healthcare; Goal is to improve U.S. employee satisfaction while reducing overall costs

Business Wire, January 30, 2018

SEATTLE & OMAHA, Neb. & NEW YORK–(BUSINESS WIRE)–Amazon (NASDAQ: AMZN), Berkshire Hathaway (NYSE: BRK.A, BRK.B) and JPMorgan Chase & Co. (NYSE: JPM) announced today that they are partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs. The three companies, which bring their scale and complementary expertise to this long-term effort, will pursue this objective through an independent company that is free from profit-making incentives and constraints. The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.

Tackling the enormous challenges of healthcare and harnessing its full benefits are among the greatest issues facing society today. By bringing together three of the world’s leading organizations into this new and innovative construct, the group hopes to draw on its combined capabilities and resources to take a fresh approach to these critical matters.

“The ballooning costs of healthcare act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes,” said Berkshire Hathaway Chairman and CEO, Warren Buffett.

“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Jeff Bezos, Amazon founder and CEO. “Hard as it might be, reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”

“Our people want transparency, knowledge and control when it comes to managing their healthcare,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase. “The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans,” he added.

The effort announced today is in its early planning stages, with the initial formation of the company jointly spearheaded by Todd Combs, an investment officer of Berkshire Hathaway; Marvelle Sullivan Berchtold, a Managing Director of JPMorgan Chase; and Beth Galetti, a Senior Vice President at Amazon. The longer-term management team, headquarters location and key operational details will be communicated in due course.

https://www.businesswire.com…

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Comment:

By Don McCanne, M.D.

The headline in this morning’s online edition of The New York Times: “Amazon, Berkshire Hathaway and JPMorgan Team Up to Disrupt Health Care.” Disruption? Above is reproduced the actual full statement from Business Wire (A Berkshire Hathaway Company). So what is their message?

For decades the business community has struggled with trying to provide health benefits for their employees, but costs have continued to rise well in excess of inflation in spite of policies put in place to slow the growth in costs – policies that have displeased employees such as high deductibles and other cost sharing and narrow provider networks that limit choice in health care, not to mention passing some of the premium increases on to the employees.

In this communication, Warren Buffett, Jeff Bezos and Jamie Dimon acknowledge the need to ensure employee satisfaction and the need to control health care costs. They have now decided to join forces to use their brilliance and expertise to finally solve this problem for the benefit of their own employees. As successful businessmen they have decided that the best approach would be to establish a not-for-profit independent company looking for solutions in technology that will “provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.”

Warren Buffett says, “Our group does not come to this problem with answers.”

Jeff Bezos says, “The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty… Success is going to require talented experts, a beginner’s mind…”

Jamie Dimon says, “Our people want transparency, knowledge and control when it comes to managing their healthcare.”

The release states, “The longer-term management team, headquarters location and key operational details will be communicated in due course.”

So they do not have a plan, but they plan to have a plan.

They intend to start with talented experts, but they appear to be looking in the technology world when they need to turn to the health policy arena since mere technological gimmicks are not going to have a significant impact on the problems that concern them.

The obvious caveat when they turn to the policy community is that they have to sort out those who propose policies proven to be capable of achieving their goals from those who propose policies based predominantly on anti-government, pro-market ideology. We already have the latter, and it is what has brought us to our knees. Several other nations have the former which has provided them with comprehensive care for everyone at an average of half of what we spend per capita on health care.

Warren Buffett already knows this. He recently said, “With my limited knowledge, I think that (single payer) probably is the best system. We are such a rich country. In a sense, we can afford to do it.”

An independent health benefit company serving their employees, even if including the employees of a large conglomeration of other companies, could not adapt most of the beneficial features of a well designed single payer model. Most of the policy defects that result in the dysfunction of our health care financing would remain in place. As smart businessmen, the last thing they should want is to invest considerable effort and resources into a venture that proves pretty much for naught.

Rather than setting up yet another technology-based company wouldn’t it be better to begin with a group of experts who understand the health needs of patients and the community at large and the public policies that would deliver on those needs? But leave out those who place markets first such as the insurers, pharmaceutical executives, for-profit corporate executives and the like.

Maybe Buffett, Bezos and Dimon should simply arrange a visit with us at Physicians for a National Health Program. Not only are we physicians, we are also policy people who support policy for the people, not for the rent seekers.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Medicare’s out-of-pocket costs eroding Social Security payments

Medicare Beneficiaries’ Out-of-Pocket Health Care Spending as a Share of Income Now and Projections for the Future

By Juliette Cubanski, Tricia Neuman and Karen E. Smith
Kaiser Family Foundation, January 2018

From the Executive Summary

Medicare helps pay for the health care needs of 59 million people, including adults ages 65 and over and younger adults with permanent disabilities. Even so, many people on Medicare incur relatively high out-of- pocket costs for their health care, including premiums, deductibles, cost sharing for Medicare-covered services, as well as spending on services not covered by Medicare, such as long-term services and supports and dental care. The financial burden of health care can be especially large for some beneficiaries, particularly those with modest incomes and significant medical needs.

Key Findings

* In 2013, Medicare beneficiaries’ average out-of-pocket health care spending was 41 percent of average per capita Social Security income; the share increased with age and was higher for women than men, especially among people ages 85 and over.

* Medicare beneficiaries’ average out-of-pocket health care spending is projected to rise as a share of average per capita Social Security income, from 41 percent in 2013 to 50 percent in 2030.

* Half of beneficiaries in traditional Medicare spent at least 14 percent of their per capita total income on out-of-pocket health care costs in 2013. The spending burden was higher for people ages 85 and over, in poor health, and with modest incomes.

* More than one-third (36 percent) of beneficiaries in traditional Medicare, and half of those with incomes below $20,000, spent at least 20 percent of their per capita total income on out-of-pocket health care costs in 2013. By 2030, more than 4 in 10 (42 percent) traditional Medicare beneficiaries are projected to spend at least 20 percent of their total income on health-related out-of-pocket costs.

From the Policy Implications

This analysis shows that out-of-pocket health care costs are a substantial and growing burden for many people with Medicare, consistent with other recent research. We found that out-of-pocket health care spending represented a sizable share (41 percent) of Medicare beneficiaries’ per capita Social Security income, on average, in 2013, and is expected to consume half of Social Security income in 2030. Some beneficiaries face greater average out-of-pocket spending as a share of average per capita Social Security income than others, including older women and beneficiaries ages 85 and over. For other beneficiaries, average out-of-pocket health care spending represents a relatively lower share of their average per capita Social Security income, likely due in part to coverage from Medicaid and the Part D Low-Income Subsidy program, which reduces the spending burden, including black beneficiaries and those under age 65. Using a different measure of the out-of- pocket spending burden based on per capita total income, we found that half of beneficiaries in traditional Medicare spent at least 14 percent of their total income on out-of-pocket health care costs in 2013, while more than one-third of beneficiaries spent at least 20 percent. By 2030, more than 4 in 10 traditional Medicare beneficiaries are projected to spend at least 20 percent of their total income on out-of-pocket health care costs.

Our results suggest that efforts to strengthen and improve the protections offered by Medicare, Medicaid, and Social Security may be needed to ensure greater retirement security for future generations of older Americans.

http://files.kff.org…

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Three ways to cut — and improve — Medicare

By Ed Weisbart
STAT, January 17, 2018

The Republicans are right. We should cut Medicare. And I know how: Keep Medicare’s funding for actual health care but eliminate bureaucratic waste, profits, and the expensive and preposterous ban on negotiating drug prices. In other words, get rid of Part C and Part D and absorb the extra features into traditional Medicare.

Medicare Advantage plans continue to grow in popularity, now attracting 31 percent of all Medicare beneficiaries. People make this choice because most Advantage plans offer reductions in copays and deductibles, along with enhanced benefits like membership in gym clubs or including a Medicare Part D pharmacy benefit. We could embed these modest features into traditional Medicare and still reap substantial savings for the national budget.

The arithmetic is easy, the benefits are clear, and the money is there. Take the profit motive out of Medicare to save billions. It’s just a matter of political will.

Ed Weisbart, M.D., is a family physician and chair of the Missouri chapter of Physicians for a National Health Program.

https://www.statnews.com…

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Comment:

By Don McCanne, M.D.

Social Security and Medicare are intended to provide financial security for the elderly and individuals with major disabilities. Yet average out-of-pocket expenses for Medicare will soon consume half of the average per capita Social Security payments. That’s not much security.

Many individuals do have other income sources to help pay the out-of-pocket expenses of Medicare, but, even there, over 40 percent are expected to spend at least 20 percent of their total income on health-related out-of-pocket costs.

Once again it is obvious that out-of-pocket expenses for Medicare beneficiaries are too high, especially for those heavily dependent on Social Security.

The solution is simple. Expand Medicare benefits to include those covered by Medigap, retiree plans, the Part C Medicare Advantage plans, and the Part D drug coverage, while cutting back on Medicare premiums, deductibles and coinsurance. We could pay for this expansion with the administrative savings and other efficiencies gained through enactment of a single payer Medicare for all program. Let’s do it.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Speed Up on Single Payer

Our First Concern Should Be Health Care For All

By John Marty
Commonweal, January 29, 2018

The United States, the wealthiest nation on the planet, remains the only industrialized country that fails to provide health care for everyone. Our dysfunctional health-care system is bankrupting families and killing people by failing to provide needed care.

Contrary to the headline on J. Peter Nixon’s November 21, 2017, article advising Democrats to “Slow Down on Single Payer,” we ought to be ashamed at the mere tinkering that is being done to our health-care system. Slowing down in our response to the health-care crisis is the worst thing we can do. Nixon correctly points out that a single health plan that covers all Americans has been a goal of progressives since the 1930s, yet he warns about pushing too fast. I share his concern about the strength of the political opposition, but that does not justify inaction when lives are at stake. And lives are at stake. Occasionally these tragedies catch the public eye. But there is virtually no public awareness that, week in and week out, people die from a lack of access to medical care. Preventing those senseless tragedies and making sure everyone has access to health care should be our first concern.

In my thirty years in the Minnesota Senate, I have been fighting Republican efforts to take away access to health care. However, I am also frustrated at Democratic politicians who are unwilling to propose real solutions. Yes, the Affordable Care Act expanded insurance coverage for millions and a “public option” might give better coverage to some. These Democratic proposals are far better than Republican efforts to eviscerate Medicaid or weaken Medicare. But they fail to meet the essential goal of providing care for all. Instead of devoting our energy to dismissing the idea of a more rational health-care system as “extreme and unrealistic,” as Nixon does, let’s begin by examining our goals. Here are some basic principles that any good health-care system must meet:

  • Cover everyone.
  • Cover all medical needs, including dental, vision, hearing, mental health, prescriptions, long-term care, alcohol and drug treatment.
  • Let patients choose their doctors and hospitals.
  • Reduce costs by fair pricing and cutting administration, not by denying care.
  • Affordable to all (premiums based on income).
  • Focus on preventive care to improve health.
  • Ensure sufficient providers to avoid waiting lines.
  • Maintain our nation’s leadership in medical care, research, and technology.
  • Pay providers in a fair and timely manner.
  • Simple, understandable funding, and payment system.

Each of these principles is important and must be met. Republican “repeal and replace” attempts fail to meet any of these goals. But neither do Democratic attempts to plug gaps in our broken insurance system. These gaps will not be closed until we replace private health insurance with health care for all. In Minnesota, we have proposed a Minnesota Health Plan to cover everyone. The MHP would be bound to these principles. It is a health plan focused on well-being and public health, not profits or politics. Although I would welcome passage of such legislation at the federal level, the urgency of the crisis calls for a push at both state and federal levels. In Canada, passage of universal health care in Saskatchewan led to universal coverage across the country within a few years.

A commonsense system like the MHP would prevent the problems that Nixon is concerned about, such as waiting lines for care. The comprehensive benefits, along with the elimination of copayments and deductibles, mean that even people with “gold” or “platinum” insurance plans would be better off under MHP. Equally important, it is patient-centered. Patients choose their providers, and medical decisions are made by patients and their doctors, not by government or insurance companies. Payments under our MHP model would be made through a “single-payer” system (roughly analogous to Medicare). Economic analysis of single-payer proposals in the United States and the success of such systems in other countries show that universal coverage is actually less expensive than our current patchwork system.

Nixon cites a dubious analysis of Senator Bernie Sanders’s health proposal that claims it would cost $32 trillion over ten years. But continuing to pay for that care in the current irrational, bureaucratic manner will cost far more than that.

Our state proposal—which could be replicated in other states—would be financed from the same sources as our current system:

More than half of all health-care spending is currently paid by the state and federal government, and we would continue to use those dollars.

Individuals and families would continue to pay premiums, but instead of paying them to Blue Cross or some other insurer, they would be paid to the Minnesota Health Plan. Those payments would replace not only current premiums, but also the copays, the deductibles, and out-of-pocket expenses for dental and other care that currently bankrupt many. Also, instead of premiums based on age or medical condition, MHP premiums would be based on ability to pay—most people would pay much less, though some would pay more—and it would be affordable to all.

Instead of an employer mandate, and instead of the annual burden of shopping for an insurance plan, employers would pay a payroll tax. And they wouldn’t have to worry that hiring an older worker will drive up their premiums.

To briefly explain why an efficient universal health-care system is less expensive than our current dysfunctional mess, look at two of the biggest cost drivers in medicine. First, our current system overpays because of completely irrational pricing. As reported in the New York Times, a national comparison of hospitals showed pricing for the simplest form of knee replacement ranged from about $3,400 to about $55,800. Hospitals charging the low-end prices are not undercharging; they set prices sufficient to cover their costs. Those radical price disparities—unrelated to costs or benefits—show that some purchasers of health care are being charged as much as ten to fifteen times what is reasonable. A logical single-payer system negotiates prices, resulting in rational costs. 

Second, our current system is bloated with enormous administrative waste. To understand the significance of the administrative savings under single payer, consider an analogy. If public schools were funded the way we fund hospitals, each teacher would spend time each day calculating the time and resources they devote to each student. The school would allocate janitorial costs, facility costs, and administrative overhead to students. The school would bill each family and their “education insurance plans.” Those insurance plans would pay for different services at different rates, with different copayments. Because education is expensive, employers would offer “school coverage” for their employees’ children. Those without employer coverage would shop for school insurance on the individual market. Because of the high cost of individual policies, the government would step in to subsidize coverage. Even so, not all families would have “education coverage” and many families would struggle to pay. As a result, schools would spend additional resources to collect payments and cost-shift unpaid expenses to other students. Setting aside additional complications such as teachers or schools being “out-of-network,” this would still be a costly, bureaucratic nightmare. It would harm education outcomes by shifting resources from teaching to billing and insurance. Financially, it would cost a fortune to pay for the billing clerks, accountants, and price negotiators for the schools, plus all the operating costs for the “school insurance” companies. Eliminating this billing and insurance bureaucracy from our health-care system would result in huge savings.

Martin Luther King Jr. said that “of all the forms of inequality, injustice in health care is the most shocking and inhumane.” For those who choose to address that moral imperative, Nixon’s alternatives are not acceptable. This is not rocket science. Virtually every other industrialized country provides health care to all their people, and most do it for less than half as much as the United States, usually with better outcomes. Addressing this injustice is not “extreme and unrealistic.” This is a cause worth fighting for, and a cause we will win.

John Marty has been a member of the Minnesota Senate since 1987. He is a former chair of the Senate Health Committee, and author of a recent book, “Healing Healthcare.” The book can be downloaded in e-book format for free at mnhealthplan.org.

https://www.commonwealmagazine.org…

Cacophony on drug pricing

Among those who want to lower drug prices, there’s cacophony, not consensus

By Erin Mershon
STAT, January 26, 2018

Of all his campaign promises, President Trump’s vow to bring down drug prices was perhaps the most popular.

An assortment of interest groups spoke out loudly and passionately on the need for action, from hospitals to doctors to insurers to generic drug makers to patients themselves.

Instead, congressional efforts to lower drug prices are at a total standstill. In interviews with STAT, lobbyists, lawmakers, and congressional staffers, Republicans and Democrats alike, said the most powerful health industry players conspicuously disagree about exactly how to move forward. Every group pushes its own priorities and strategies — a cacophony that makes it unlikely that crushing drug prices will change any time soon.

The disarray was on full display at a recent congressional hearing, when representatives from nearly every major trade group with any stake in the country’s drug prices — AMA, AHIP, and AHA included — spent almost an hour and a half testifying without more than a cursory discussion of how Congress could fix the problem. When they finally did talk solutions, outside of buzzy phrases like “increase transparency,” almost none of their answers matched.

So why can’t the broader health care industry agree on how to make drugs more affordable? Here are five factors.

1. Health care lobbyists are stuck playing defense.

2. Congress isn’t jumping to act.

3. Each industry has very different priorities, even when they do agree.

4. All the major players have a stake in the status quo.

5. There’s no silver bullet.

https://www.statnews.com…

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Pharma gets a seat at the table at private dinner with Trump at Davos

By Rebecca Robbins
STAT, January 25, 2018

The leaders of drug makers Novartis and Bayer joined President Trump on Thursday evening at a private dinner in Davos, the snowy Swiss resort that’s playing host this week to a gathering of elites from around the globe.

Vas Narasimhan, who officially becomes CEO of Novartis (NVS) next week, and Bayer (BAYN) CEO Werner Baumann were among the 15 European business executives invited to the event. The White House’s goal for the evening: to encourage the companies to make investments in the U.S. and to encourage others to join them, National Economic Council Director Gary Cohn told reporters earlier this week.

Trump is the first sitting president in two decades to attend the annual four-day meeting of the World Economic Forum, which draws a who’s-who list of politicians, one-percenters, and pharmaceutical royalty. Trump is scheduled Friday to deliver a speech, in which he’s expected to tout the tax cuts introduced by the new tax law and make the case for trade policies more favorable to U.S. interests.

A year ago, then-President-elect Trump famously declared that drug companies are “getting away with murder” when it comes to pricing their drugs, but the administration has yet to take any significant policy steps to drive prices down.

https://www.statnews.com…

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Comment:

By Don McCanne, M.D.

Virtually everyone agrees that drug costs are too high, but the private sector’s response has been to attempt to reshuffle the drug money wherein each stakeholder is trying to get a larger share, while collectively they are doing nothing of significance to control our global drug costs. When the private sector is out of control, it is time for the government to step in.

During his campaign, Donald Trump promised repeatedly that he would bring down drug prices. But after a year in office, he has done nothing, until now. And what is he doing? He is attending the World Economic Forum in Davos, Switzerland. That is a meeting about power players moving money around, not about social policy to benefit the people. He hosted a private dinner that included leaders in the pharmaceutical industry – an industry that he said was “getting away with murder.” That certainly is not an environment wherein discussions would take place on strategies to lower the cost of drugs for the benefit of patients.

In her article, STAT Correspondent Erin Mershon lists five reasons why the broader health care industry is unable to reach agreement on making drugs more affordable. A common thread is that each sector of the broader industry is primarily concerned about its own priorities and strategies, and that has resulted in cacophony without progress.

But Mershon’s fifth point – that there is no silver bullet – is an observation that might be expected with a story background exemplified by the meeting in Davos. Instead of looking for silver bullets that the billionaires can share, we should be looking for solutions to the drug cost problems that patients face.

Ah, but there is a golden bullet that would work – a well designed single payer national health program with bulk purchasing and prices negotiated by our own public stewards.

Let’s just hope that when President Trump returns home he doesn’t continue his discussions with the industry stakeholders over dinner at Mar-a-Lago. That’s not the environment we need right now. People are dying for lack of affordability of drugs that reduce suffering and save lives.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Find your savings in single payer

By Carol Krush, M.D.
Minneapolis Star Tribune, Letters, January 26, 2018

Regarding “Tricky operation” (Jan. 21) by Dr. Steve Calvin: Those on the left do not believe that “Medicare and Medicaid dollars flow from a magical federal fountain providing an ever-increasing flow that will never run dry.” Rather, it is the excessive administrative overhead of our private health insurance system that is draining our country, its individuals and businesses.

A single-payer system would spend fewer dollars on administration. For example, Medicare, which is a single-payer system, spends less than 3 percent on administration vs. 15 percent to 20 percent with private insurance. Not only that, a single-payer system, by including everyone, would have greater ability to control costs by negotiating down the exorbitant prices Americans pay for prescription drugs. And it could create uniform reasonable transparent charges for other overpriced segments of our current system.

Fiscal conservatives might want to look at the savings single-payer could achieve, through stemming the flow of public dollars that are already being used to support our health care system. Not only does our current multipayer system prevent or delay individuals from getting needed health care, leading to unhealthier workers, but wages are stagnant and global competitiveness is reduced due to rising premiums.

Calvin introduces many important ideas for improving our system, such as regulatory reform, innovative efficiency, transparency, reevaluation of pricing, and roles of doctors and hospitals. But if the bipartisan Minnesota Senate Select Committee on Health Care Consumer Access and Affordability does not take a serious look at the elements of state Sen. John Marty’s comprehensive Minnesota Health Plan, then it will fail to address the central issues it seeks to solve: access and affordability.

Dr. Carol Krush is a retired family physician.

http://www.startribune.com…

Medicaid ensures earlier access and more timely management for urgent surgical conditions

Association of the Affordable Care Act Medicaid Expansion With Access to and Quality of Care for Surgical Conditions

By Andrew P. Loehrer, M.D., M.P.H.; David C. Chang, Ph.D., M.P.H., M.B.A.; John W. Scott, M.D., M.P.H.; Matthew M. Hutter, M.D., M.P.H.; Virendra I. Patel, M.D., M.P.H.; Jeffrey E. Lee, M.D.; Benjamin D. Sommers, M.D., Ph.D.
JAMA Surgery, January 24, 2018

Key Points

Question: How was Medicaid expansion under the Patient Protection and Affordable Care Act associated with patient presentation with and management of common surgical conditions?

Findings: In this study of patients with 1 of 5 common surgical conditions, Medicaid expansion was associated with a 7.5–percentage point increase in insurance coverage at the time of hospital admission. The policy was also associated with patients obtaining care earlier in their disease course and with an increased probability of receiving optimal care for those conditions.

Meaning: The Patient Protection and Affordable Care Act’s Medicaid expansion was associated with increased coverage of patients, earlier presentation with common diagnoses, and improved surgical care.

From the Introduction

Uninsured and underinsured patients are significantly more likely to delay care and present with more complicated disease for conditions including appendicitis, cholecystitis, diverticulitis, aortic aneurysms, and lower extremity peripheral artery disease (PAD). Insurance status is also associated with decreased probability of receiving optimal care for such diagnoses, including a lower likelihood of minimally invasive surgery, a lower likelihood of receiving immediate cholecystectomy for acute cholecystitis, and a higher likelihood of amputation for vascular disease. The acute onset or deterioration of these diagnoses provides an ideal setting for studying short-term changes in presentation and management after population-wide insurance coverage expansion. As more individuals gain insurance coverage, one might also expect a greater probability of patients presenting earlier and with less severe disease at the time of diagnosis and in turn receiving more timely and less morbid management.

https://jamanetwork.com…

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How Medicaid Fails The Poor

By Avik Roy

There are many problems with Obamacare. But the law’s cruelest feature is what it will do to low-income Americans who are already struggling. Study after study shows that patients on Medicaid do no better, and often do worse, than those with no insurance at all.

https://www.encounterbooks.com…

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Comment:

By Don McCanne, M.D.

Some conservatives have suggested that Medicaid provides such little benefit that patients might do better with no insurance at all (Avik Roy, above). This totally ignores the fact that Medicaid removes financial barriers to health care and thus improves access. The benefit of having affordable access to care is demonstrated in the study by Andrew Loehrer, et al.

The authors showed that Medicaid expansion under the Affordable Care Act resulted in more individuals being covered by the program, and that individuals with one of five major, urgent surgical conditions presented earlier in the course of their illness thus enabling management at a stage with less complexity and more favorable outcomes.

We already know that the uninsured frequently delay obtaining care and end up worse off for it. This also applies to the underinsured – people with deductibles and other cost-sharing that create a reluctance to seek care as expeditiously as they should. One of the great advantages of Medicaid is that there is usually no cost sharing and thus no hesitation because of concerns about out-of-pocket costs (though, unfortunately, several conservative governors are trying to change that now).

The lesson here is not that Medicaid is a better program – it has too many other deficiencies – but rather that requiring payment as a condition of receiving care may result in worse outcomes. A well designed single payer system has measures to contain health care spending that are much more patient-friendly than out-of-pocket cost sharing.

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Employer-sponsored plans have not controlled price inflation

2016 Health Care Cost and Utilization Report

Health Care Cost Institute, January 2018

The Health Care Cost Institute’s (HCCI) 2016 annual report on U.S. health care cost and utilization trends finds that Americans under the age of 65 who were insured through their employer spent more than ever on health care, and spending grew faster in 2016 than in recent years.

The report covers the period 2012 through 2016 and includes claims data from four national insurance companies: Aetna, Humana, Kaiser Permanente, and UnitedHealthcare.

Health Care Spending Trends

Health care spending per person for the commercially insured reached a new high of $5,407 in 2016. Total spending per person in 2016 was 4.6% higher than 2015. This was the highest annual total spending growth observed during the 2012-2016 study period; much greater than the 2.8% growth from 2012 to 2013.

Increasing Prices Drive Health Care Spending Growth

Health care spending is the product of two components: price and utilization. From 2012 to 2016, increases in spending were almost entirely attributable to increases in price. In 2016, high growth in prices was partially offset by a net decrease in utilization.

From 2012 to 2016, we observed increases in prices each year and across nearly all service categories. The greatest cumulative price increase was seen in prescription drugs, with 24.9% price growth. Inpatient services also experienced very high price growth, with prices increasing 24.3% between 2012 and 2016.

In contrast, utilization of most services declined over the 2012-2016 period, with the exception of prescription drugs, which increased 1.8%. The utilization of inpatient services had the largest decline, with admissions rates decreasing 12.9% between 2012 and 2016. This decline in use resulted in relatively low inpatient spending growth despite the high price growth. Conversely, the small increase in use of prescription drugs, coupled with high price growth, led to very high spending growth.

Inpatient Spending Trends

Between 2012 and 2016, spending on inpatient admissions grew 8%.

The biggest driver of the higher inpatient spending in 2016 was surgical admissions.

Inpatient Use Continued to Decline but Prices Rose Substantially

Within the inpatient category, declines in the use of both medical admissions and surgical admissions drove the overall decline in utilization. Every sub-category of inpatient admissions experienced double-digit price increases, with cumulative growth ranging from 18% to 30%. The increase in prices more than made up for the decline in use, causing inpatient spending to increase between 2012 and 2016.

Outpatient Spending Trends

In 2016, outpatient services had the highest annual spending growth of any service category, at 6%.

Within the outpatient services category, emergency room (ER) visits and outpatient surgeries accounted for the largest share of spending.

Outpatient Prices Drove Spending Growth

From 2012 to 2016, utilization of most outpatient services declined, but we did observe modestly higher utilization of ancillary services and emergency room visits towards the end of the study period.

Emergency room visits. Between 2012 and 2016, the price of an outpatient ER visit increased by 31%. The price increase, in combination with the slight increase in use, drove 40% of the increase in total outpatient spending between 2012 and 2016.

Outpatient surgery. Prices rose 19% from 2012 to 2016. Despite the decline in use, surgery continued to account for the largest share of outpatient spending and was responsible for 28% of the cumulative increase in spending on outpatient services.

Professional Services Spending Trends

Professional services—including visits to physicians, administered drugs, anesthesia, radiology, pathology, and related services–made up the largest share of health care spending in 2016, but had relatively low spending growth between 2012 and 2016, rising a cumulative 11%.

Utilization of PCP and Specialist Visits is Shifting

We rarely observe a decline in spending on health services. Within the professional services category, however, two types of services had net declines from 2012 and 2016. Spending on professional radiology services fell by 3%, but more striking was the 6% decrease in spending on office visits to PCPs.

The decline in spending on PCP office visits over the study period was driven by the 18% decline in use of these visits. In contrast, the increased utilization of specialist visits contributed to a 31% spending increase for those visits.

Prescription Drug Spending Trends

Prescription drugs had the highest cumulative spending growth (27%) of any service category during the study period.

Out-Of-Pocket Spending Trends

From 2012 to 2016, total OOP spending per person increased slightly each year. In dollars, the average increase was relatively small – a total of $88. It is important to note that our OOP data does not include consumer spending on premiums, which studies suggest are rising considerably and adding to the overall health care spending burden for consumers. In addition, our per person OOP metrics do not reflect the OOP costs of using a certain service, but consider OOP spending as an average across the population – including those who used no services at all.

The cumulative growth in OOP spending (12%) was outpaced by total spending (15%). However, like total spending, OOP spending growth appears to be on the rise after a few years of relatively low growth. In 2016, we observed a modest increase of 3.6% in OOP spending per person, up from a 2.9% increase in 2015.

http://www.healthcostinstitute.org…

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Comment:

By Don McCanne, M.D.

This study is important because it shows what impact private commercial health plans offered by employers are having on prices and utilization.

The Patient Protection and Affordable Care Act was supposed to protect health care benefits and control excessive price increases. Prices are way up, and utilization is down in spite of the need, indicating that current policies have not achieved either goal.

Another goal was to expand primary care to improve access, efficiency, and value, yet one of the more alarming findings in this report is that primary care office visits declined by 18%, whereas the increase in specialist visits resulted in 31% greater spending for those visits.

The architects of the Affordable Care Act wanted to protect employer-sponsored plans because, they said, these plans were the part of the health care financing system that was already working well. Yet these private commercial insurers have brought us even higher prices, reduced access but with higher net spending, and a shift from efficient primary care to more expensive specialized services.

These private commercial insurers are selling us an awful lot of very wasteful and intrusive administrative services, and yet they are not doing their job of improving efficiency and value in our health care system. They gotta go.

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Health care reform driven by health plans, not physicians

By Stephen B. Kemble, M.D.
Honolulu Star Advertiser, Jan. 24, 2018

At the “2018 Hawaii State of Reform” health policy conference on Jan. 10, I saw only a handful of physicians in the audience of about 300, but plenty of participants representing health plans and their contractors and subcontractors. The conference featured updates on our physician workforce shortage, and the effects of homelessness and social determinants on health.

The only policy solutions offered were new payment models that reward “value,” not volume, and shift insurance risk onto doctors and hospitals. I did not hear anything about the adverse effects of new payment models on physicians, or on the rapidly worsening problems we are seeing with access to care due to physicians leaving practice or refusing new patients with Medicare and Medicaid (MedQUEST).

For psychiatry, the latest workforce data shows an adequate number of psychiatrists on Oahu. However, I recently retired from the private practice of psychiatry, and we could find only two Oahu private- practice psychiatrists still accepting MedQUEST or Medicare patients, and both are completely overloaded. I still work part-time in Queen Emma Clinic, seeing mostly Medicaid patients and doing collaborative care, but the need there is also far greater than I can meet.

My patients report similar problems finding primary care doctors who will accept new Medicare or MedQUEST patients. I strongly suspect this has a lot to do with increasingly burdensome prior authorization policies and the administrative demands and staffing required by new payment models being imposed by Medicare and HMSA.

I have been experiencing much more frequent, gratuitous and absurd formulary restrictions and prior authorization policies by the plans’ pharmacy benefits managers in the past year or two, worst for the MedQUEST plans.

Now MedQUEST wants to follow HMSA and Medicare and move to “value- based” payment models. These were designed to discourage unnecessary care driven by fee-for-service incentives, which has never been much of a problem in Hawaii’s Medicaid program anyhow.

These payment models also happen to discourage taking on sicker, more complex patients with a lot of social problems, which means the Medicaid population. What good are pay-for-performance incentives if almost no doctors are willing to see the patients in the first place?

Hawaii’s health reform initiatives have been driven by the health plans, and skeptical doctors have been ignored or excluded from planning. If those driving policy remain unconcerned with the reasons why almost no psychiatrists and fewer primary care doctors are accepting new Medicare or Medicaid patients, we will end up with a shrinking pool of doctors caring for increasingly restricted patient panels and doing well on quality metrics, while those who need care the most are unable to find any available doctor, leaving them with no access to care except the emergency rooms and urgent care clinics.

This has already happened with psychiatry, and it is a direct result of policies that ignore effects on front-line patient care. We used to have broad acceptance of Medicaid among both private practice psychiatrists and primary care doctors, but psychiatrists have been effectively driven out of MedQUEST, and primary care is not far behind.

This clearly is not good for quality care, or for the total cost of care in the community, regardless of the performance of the limited number of doctors who have invested in the computerization and staffing required for success under new payment models.

We urgently need a dialogue between policy makers — health plan leadership, the Ige administration and legislators — and practicing doctors, or we will soon face a catastrophic collapse of our once exemplary health care delivery system, starting with Medicaid.

Any new Medicaid waiver requests should be delayed until we can find policies that will not continue to drive doctors out of MedQUEST.

Health care reform without doctors is doomed to failure.

www.staradvertiser.com…

Micromanaging medical care contributes to physician burnout

By Arcelita Imasa and Seiji Yamada
Honolulu Star Advertiser, Jan. 24, 2018

Projected increases in health costs in Hawaii are growing public concerns.

The Star-Advertiser published a Jan. 14 editorial and a Jan. 21 story on the rising-cost drivers, identified as “an aging population, prescription drugs, expensive technology and procedures, as well as unhealthy lifestyles that lead to costly chronic illnesses.”

Just this past Saturday, at the medical student-organized “Doctors Create Local Solutions” event, physicians gathered to propose medically informed solutions to Hawaii’s health care crisis. As Dr. Stephen Kemble pointed out: Until 2017, the United Health Foundation’s annual ranking had placed Hawaii as the healthiest state for five years. Furthermore, prior to the Affordable Care Act, Hawaii had among the lowest commercial health insurance costs, and our Medicare costs were the lowest in the country.

That is, Hawaii’s medical community had not been guilty of resource overutilization. Nonetheless, administrative oversight to micromanage physicians has burgeoned in recent decades. Insurance requirements, including prior authorization for tests or therapies and increasing documentation requirements, force physicians to spend two additional hours on electronic health records and desk work for every hour with patients, plus an hour or two in the evenings.

Perhaps you have noticed that your doctor has her eyes glued to her computer screen. Sadly, much of what she is documenting has more to do with coding and billing requirements than with caring for you.

None of us went into medicine in order to stare at a computer screen. We are now forced to. This contributes to physician burnout. Dr. Kelley Withy noted that over 50 percent of physicians admit to burnout, and 15-30 percent of practicing doctors and 29 percent of resident doctors are depressed. Yearly, approximately 400 U.S. physicians commit suicide.

Kemble suggested that elimination of pay-for-documentation would help restore professional autonomy and morale, and that a physician payment system based on time spent would help eliminate the perverse incentive to avoid caring for the sickest patients.

Particularly on the neighbor islands, doctors are acutely aware of the physician shortage. Although Withy noted that the state is short 769 physicians, there are only 121 job openings. Big Island pediatrician Wesley Sugai, for one, listed the variety of management tasks that private practitioners perform. Many will be retiring soon, but most young medical graduates prefer a salaried position.

While it is undeniable that “unhealthy lifestyles” contribute to health care costs, a minority of patients drives those costs. Of Hawaii’s 1.4 million people, 365,000 are covered by Medicaid (MedQUEST). As noted by physician and state Sen. Josh Green, of the $2 billion annual expenditure on Medicaid, $1.2 billion is spent on the 15,000 sickest patients.

To bend the cost curve, we need to identify the sickest and make them healthier, so that they won’t need the emergency department or hospital admission. Dr. Jeffrey Brenner, who applied “hotspotting” to Camden, N.J., suggested strengthening primary care and supportive services. This is, in fact, the mission of federally qualified health centers.

The Jan. 21 Star-Advertiser article (“Health care costs heading for eventual catastrophe”) quoted the owner of Nii Superette as saying that if Hawaii’s employer mandate for health insurance collapses, we may need “a model like universal health care.” After the end of our program Saturday, Dr. Leslie Gise urged the newly formed Hawaii chapter of the Students for a National Health Program to work for “Medicare for all” —and led the students in the cheer, “Everybody in, nobody out!”

Arcelita Imasa, of Honolulu, is a medical student; Seiji Yamada, of Milillani, is a family physician.

http://www.staradvertiser.com…

Dr. Claudia Fegan ‘Medicare for All’ town hall

PNHP national coordinator Dr. Claudia Fegan participated in a “Medicare for All” town hall on Jan. 23, 2018. The first of its kind town hall was hosted by Sen. Bernie Sanders (I-Vt.) in partnership with leading digital media outlets NowThis, ATTN: and The Young Turks. Dr. Fegan’s segment starts at the 11:25 mark below.

Lower out-of-pocket spending after ACA, but much more needed

Out-of-pocket Spending and Premium Contributions After Implementation of the Affordable Care Act

By Anna L. Goldman, MD, MPA; Steffie Woolhandler, MD, MPH; David U. Himmelstein, MD; David H. Bor, MD; Danny McCormick, MD, MPH
JAMA Internal Medicine, January 22, 2018

Key Points

Question: Was implementation of the Affordable Care Act associated with reduced spending on out-of-pocket medical expenses and household premium contributions among nonelderly adults?

Findings: In this nationally representative survey of validated spending data from 83 431 US adults, mean out-of-pocket spending decreased by 11.9% in the first 2 years after the insurance expansions, driven by reductions among persons eligible for the Medicaid expansion and those eligible for cost-sharing and premium subsidies on health insurance exchanges. Premium contributions increased by 12.1%, mainly owing to large increases in the higher-income group, whereas total health spending by households decreased in the Medicaid-eligible (lowest-income) group by 16.0%.

Meaning: Implementation of the Affordable Care Act was associated with reduced out-of-pocket spending for US medical care, particularly among those with lower incomes, but not with reduced premiums.

From the Discussion

In the first 2 years of implementation, the ACA was associated with a decrease in mean out-of-pocket spending for the overall population, driven by decreases among the lowest- and low-income groups and a reduction in high-burden out-of-pocket spending overall and among the lowest-income group. Mean premium payments increased moderately, whereas the prevalence of high-burden combined health spending and income-based inequalities in high-burden spending did not change.

The ACA’s Medicaid expansion, which generally required enrollees to pay neither premiums nor co-payments, likely accounts for our finding that out-of-pocket spending decreased among the lowest-income group after the law’s implementation. This consequence might have been greater if all states had accepted the ACA’s Medicaid expansion. In the analysis of high-burden spending in this group, controlling for use of health care services slightly attenuated the decrease but did not substantially alter our findings. The differences noted for the lowest-income group in our placebo test in the pre-ACA period suggests that our results for this group may also have been influenced by secular trends or early expansions of Medicaid in some states. Because only 17.8% of adults in the lowest-income group paid insurance premiums before the ACA, we are not surprised that the legislation had little effect on premiums in this group.

The reduction in out-of-pocket spending for low-income individuals (139%-250% of FPL) that we observed suggests that the ACA’s exchange plans and cost-sharing subsidies were associated with a decreased burden of health care costs for this population. Our finding from models controlling for use of health care services suggests that decreased use of medical services and drugs did not drive this decrease.

The decrease in mean out-of-pocket expenditures by the middle-income group may reflect the modest 5.1% increase in coverage gained in this group under the ACA. Although individuals in this income group were not eligible for subsidized cost-sharing on the exchange, the ACA’s provision that eliminated cost-sharing for preventive services may have decreased out-of-pocket spending. Although many individuals in this group were eligible for premium assistance through the ACA exchanges, the subsidies were apparently insufficient to prevent growth of premium contributions for this group or to reduce their total health spending.

Previous studies have highlighted the ACA’s successes. About half of the previously uninsured population gained coverage. Several other indicators also improved, such as the likelihood of having access to affordable care and self-reported health status.

The ACA did not have a greater effect on out-of-pocket spending for several reasons. First, only a small proportion of Americans—6.5% according to our data—became newly insured after the ACA. Second, about 28 million Americans remain uninsured. Third, many of those with coverage continued to incur high costs; in 2016, individual deductibles were a mean of $3064 in exchange Silver plans (the metal tier chosen by most exchange enrollees) compared with $1478 in employer-sponsored plans.

Conclusions

Repeal of the ACA was under consideration in Congress several times in the past year, and the future of the ACA remains uncertain. Our findings carry several implications for the health reform debate. First, the ACA was associated with moderate reductions in the cost burden for lowest-, low-, and middle-income households, which represents incremental but important progress. Repealing or otherwise dismantling the legislation without a suitable replacement could cause financial harm to many lower-income families. As of this writing, the Senate tax bill includes a repeal of the individual mandate. If enacted, the numbers of uninsured persons will increase, along with their out-of-pocket costs. Premiums will likely increase because healthier people will exit the insurance pool.

Second, medical expenses currently consume a large share of many families’ incomes and compound income inequalities. Reforms to the ACA that could improve household spending burdens include expanding Medicaid in all states, increasing the generosity of cost-sharing and premium subsidies, and increasing the actuarial values of standard exchange plans. International experience suggests that a universal, comprehensive national health insurance program would most effectively reduce household spending and ameliorate disparities.

https://jamanetwork.com…

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Comment:

By Don McCanne, M.D.

This well documented analysis confirms that “implementation of the Affordable Care Act was associated with reduced out-of-pocket spending for US medical care, particularly among those with lower incomes, but not with reduced premiums.”

But ACA still falls far short of the reform that we need. The bottom line, as stated in their conclusion: “International experience suggests that a universal, comprehensive national health insurance program would most effectively reduce household spending and ameliorate disparities.” ACA isn’t that.

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